Children's Fitness Tax Credit

Back in 2008, Swimming Canada’s Director of Finance and Administration, Mr. Larry Clough circulated a memo informing all clubs that the federal government had proposed instituting a "Children’s Fitness Tax Credit" and he provided details on how swimmers’ parents can claim a tax credit for swim fees paid in the preceding calendar year.

“The Government of Canada proposes to allow, starting in 2007, a non-refundable tax credit on eligible amounts of up to $500 paid by parents to register a child in an eligible program of physical activity.

The following is information is from the Canada Revenue Agency, and outlines the procedure for clubs to issue tax receipts.

Starting in 2007, parents should receive, or ask for, a receipt from organizations providing eligible programs of physical activity in which their child is enrolled. The organizations will determine the part of the fee that qualifies for the tax credit.

The parents will need to keep the receipts issued by the organizations that deliver the programs. They will not need to submit receipts when filing their tax return, but must keep them in case the Canada Revenue Agency asks for them when verifying the claim. Receipts should be kept for six years.”

Fact Sheet Children’s Fitness Tax Credit

The following is information about the proposed tax credit for organizations that provide eligible programs of physical activity. This information is based on legislation that has been tabled in the House of Commons but that has not yet become law.

Proposed Definition of a Program of Prescribed Physical Activity

An eligible program of prescribed physical activity, for the purposes of the credit, will be defined as: An ongoing, supervised program, suitable for children, in which substantially all of the activities undertaken include a significant amount of physical activity that contribute to cardio-respiratory endurance, plus one or more of:

muscular strength,

muscular endurance,

flexibility, and

balance.

This definition will cover many sports programs that involve sport but recognizes that the practice of any sport physical activity does not always call on cardio-respiratory endurance, notably in the initial learning stages. Eligibility of a program would be based on the general nature of the activities, and the benefits of involvement over time. The definition will also take into account the average participants’ age, health, skills, presence of a disability, and other relevant factors.

In keeping with the expressed purpose of the tax credit, and in the spirit of Canada’s Physical Activity Guides for Children and Youth published by the Public Health Agency of Canada, programs of prescribed physical activity for which tax receipts are issued should encourage children to strive towards at least 30 minutes of sustained moderate to vigorous physical activity per session for children under 10, and 60 minutes of sustained moderate to vigorous physical activity for children 10 and over.

By requiring a supervisory presence and by referring to activities that are "suitable for children", the proposed definition acknowledges parents’ role in assuring the safety of their children. It reminds those delivering programs of prescribed physical activity for children that safety is paramount and that such programs should comply with federal and provincial safety regulations.

Categories of Eligible Programs

In addition to the above definition, and in order to recognize the many ways in which children are enrolled and participate in organized physical activity, the Income Tax Regulations will provide that programs are eligible for the tax credit if they last at least eight weeks at a minimum of one session per week, or, in the case of children’s camps, five consecutive days – provided in the latter case that more than 50 per cent of the program time is devoted to physical activity.

A child’s membership in a club, association or other organization for two months or more would also be considered participation in an eligible program if more than 50 per cent of the programs available as a result of membership are in the nature of an "eligible program", or more than 50 per cent of the available time is devoted to activities in an "eligible program". The eligible portion of the program’s membership and registration fees could, in general, be pro-rated for the purposes of the credit where it constitutes 50 per cent or less of the total program cost.

Organizations can issue a receipt for the portion of a family membership that covers a child’s participation in an eligible program.

While fees charged for extracurricular programs that take place at a school will be eligible, the credit will not cover fees charged for regular school physical education programming.

Sporting, recreational and other activities in which motorized vehicles (e.g., automobiles, motorcycles, power boats, airplanes, snowmobiles) are used as an essential component of the activity will also be excluded.

Measures for Children With Disabilities

In recognizing the particular challenges that children with disabilities face, the Income Tax Act will be amended to raise the age limit for disability tax credit (DTC)-eligible children from under 16 to under 18 years of age for the purposes of the Children’s Fitness Tax Credit. The Act will also be amended to introduce a separate $500 non-refundable amount for DTC-eligible children subject to spending a minimum of $100 on registration fees for an eligible program. This additional non-itemizable amount provides general recognition of the extra costs that children with disabilities encounter in becoming involved in programs of physical activity, notably with regard to specialized equipment, transportation and attendant care.

Calculating Eligible Fees

To be eligible for the children's fitness tax credit, the fees must be paid for a child who is under 16 at any time in the year. The fees must relate to the cost of registration or membership in an eligible program of physical fitness activity. If your organization provides family memberships relating to an eligible program of physical activity, you will be able to issue a tax receipt for the child's portion of the membership fees.

Registration and membership costs can include the costs of administration, instruction, and the rental of facilities. If the fees charged to parents include a part for accommodation, travel, food, or beverages (for example, room and board at a fitness camp), then this part must be deducted when calculating the part of the fees that qualify for the tax credit.